October ETF Data: Another Big Month

by on November 4, 2010 | ETFs Mentioned:

ETF assets continued their climb higher in October, bolstered by both a continuation of the rally in global equity markets and impressive cash inflows. Industry assets finished the month at about $940.4 billion according to data from the National Stock Exchange, an increase of more than 4% over the previous month and nearly 33% compared to the same period a year ago. Cash inflows in October came in at more than $13 billion, bringing the year-to-date total close to $90 billion.

Most of the cash inflows in October came to equity funds, with international stock ETFs accounting for the lion’s share of new cash into the industry. Global and international equity ETFs had inflows of $8.3 billion according to the NSX, while U.S. equity funds took in more than $3 billion. Despite red hot natural resource prices thanks to a struggling dollar, commodity ETFs actually saw small cash outflows last month [read Rethinking Commodity ETFs].

Vanguard Continues Winning Streak

After launching more than a dozen new ETFs in September, Vanguard slowed down a bit on the product development front in October. Still, the company’s ETF lineup took in about $5.2 billion during October, the biggest haul for the month. Also growing their asset bases considerably were iShares ($3.6 billion in inflows) and State Street ($1.4 billion). But several of the industry’s smaller players continued to grow quickly. ALPS saw about $157 million in cash flows, or 58% of September assets, thanks in large part to tremendous interest in its Alerian MLP ETF (AMLP). EGShares saw cash inflows of about $87 million on the month, equivalent to about 50% of the company’s assets at the start of October. By comparison, Vanguard’s inflows for October represented about 4% of assets at the end of the third quarter, while the flows to iShares and State Street represented less than 1% of assets at the beginning of the month. Also posting huge relative gains were PIMCO (up $376 million) and Global X (up $175 million).

In one of the most closely-watched head-to-head battles, Vanguard’s Emerging Markets ETF (VWO) continued to close the gap on the iShares fund also linked to the MSCI Emerging Markets Index (EEM). VWO raked in $3.2 billion in October–the biggest total in the industry–to bring assets north of $40 billion. EEM boasted the second highest level of cash inflows in October, taking in $1.6 billion to finish with more than $48 billion. EEM’s assets have grown by about 37% over the last year, but VWO has increased by more than 150%. The advance of the Vanguard fund on its larger rival is largely attributed to expenses; EEM charges 0.72% while VWO features an expense ratio of just 0.27% [also see the Emerging Markets ETF Center].

In another matchup of products differentiated primarily by costs, the iShares COMEX Gold Trust (IAU) appears to be gaining ground on the ultra-popular GLD. IAU raked in $127 million in October, and now has about $4.5 billion in assets. GLD, on the other hand, experienced outflows of almost $500 million–perhaps further evidence that investors are beginning to gravitate towards the most cost-efficient ETF options. Other big winners in terms of cash inflows includes the Financial SPDR (XLF, $706 million in inflows), Technology SPDR (XLK, $963 million), and SPDR S&P Dividend ETF (SDY), $767 million). Besides GLD, other funds experiencing big outflows in October included the Russell 200 Index Fund (IWM, outflows of $797 million), FTSE/Xinhua China 25 Index Fund (FXI, $492 million), and S&P 500 Index Fund (IVV, $484).

Notional ETF/ETN trading volume for the month totaled $1.35 trillion, which represents 28% of all U.S. equity trading volume.

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Disclosure: No positions at time of writing.